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5.4. Tax Base for Non-Resident Entities

Non-resident entities operating in Nepal through a permanent establishment ('PE') are subject to tax on income sourced from Nepal. There is a branch tax on the deemed remittance of after-tax income to the foreign head office (see Sec. 4.2.).

Dividend income received by a non-resident company from a resident company is exempt from corporate tax, provided tax is paid by the distributing company on the underlying profits.

Non-resident entities deriving income from the source in Nepal without a PE are subject to withholding tax on their income (See Sec. 8.2.2. below for tax rates).